Managed Care Outlook 2025

Litigation trends - judicial scales icon

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The past year brought several trends in Employee Retirement Income Security Act (ERISA) health benefit litigation that should continue into 2025. Members filed a new wave of cases focused on coverage for obesity medication; they also filed behavioral health/mental health parity cases in increasing numbers; and laboratory providers brought a growing number of suits against health plans and administrators concerning COVID testing and other issues. In 2025, plans and administrators should be prepared to respond to these continuing trends.

Members allege obesity discrimination and seek coverage of weight loss drugs

In a surge of new cases, members filed class actions alleging that plans and administrators engaged in disability discrimination by excluding coverage for weight loss medications such as Wegovy and Zepbound. In these suits, plaintiffs allege that plans and administrators violated the Affordable Care Act’s protections against discrimination by crafting and maintaining benefit exclusions for medications used for weight loss. They assert a variety of theories, including intentional discrimination, disparate impact and proxy discrimination (i.e., that a “weight loss” exclusion targets obese members and only appears neutral). It remains to be seen whether these theories will withstand early motions. Because some members argue that an obesity diagnosis requires a holistic evaluation of the patient’s clinical circumstances, courts may conclude that class certification would be inappropriate because individualized issues predominate over common ones. Managed care companies should expect additional filings in 2025, especially under ERISA, given the increase in prescriptions for these medications and the number of plans that are expected to restrict coverage for the drugs in 2025 given the drugs’ high cost. Plans and administrators should consider the risk of litigation when determining whether to modify plan coverage terms for weight loss drugs.

Behavioral health cases abound

In 2024, members filed more suits concerning behavioral health under ERISA and the Mental Health Parity and Addiction Equity Act. An important development in this space occurred in September 2024 when the Fifth Circuit joined the Tenth Circuit in finding that denial letters must contain detailed information, such as specific references to medical records, to satisfy ERISA’s “meaningful dialogue” standard. See Dwyer v. United Healthcare Insurance Company, 2024 U.S. App. LEXIS 23866 (5th Cir. Sept. 19, 2024). Other circuits will have the opportunity to consider adopting the same rationale in 2025. Due to these rulings, different federal circuits now have increasingly divergent views on how an administrator must communicate its determination to members, at least for behavioral health services. Whether courts will apply the Tenth and Fifth Circuits’ rationale to denial letters for other types of services, such as inpatient medical care, also remains an open question. In this evolving environment, claims administrators should review their current practices for responding to appeals concerning behavioral health services. They should also consider modifying their appeal letters to either include or attach more detailed information regarding the bases for denials.

Key takeaways
  • Members are increasingly filing class actions alleging disability discrimination due to exclusion of weight loss medications, with more cases expected in 2025
  • There is a rise in behavioral health litigation under ERISA and MHPAEA, with some courts requiring detailed denial letters, leading to divergent federal circuit views
  • Laboratory providers continue to file claims against health plans for improper reimbursement of COVID-19 testing, with mixed success under various legal theories
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